Cooperative Society

As a form of organization, it is an enterprise ordinarily set up by “economically weak” individuals to further their common economic and social interests to eradicate capitalist exploitation, to eliminate middlemen, and to bring the consumer and producer together.The cooperative movement is commenced among the poor deprived labors and low-middle class people of the society in the post-industrial revolution.It first begins in 1844 in Britain by 28 weavers. Later this organization revealed at different nations at different times.

Definition of Cooperative Society

A cooperative society is a voluntary association that started with the aim of the service of its members. It is a form of business where individuals belonging to the same class join their hands for the promotion of their common goals.

His philosophy of the formation of a cooperative society is “all for each and each for all”. Cooperation work with the feeling of helping others.

A co-operative society is entirely different from all other forms of business organization. It protects the interests of the weaker sections of the society. It is a voluntary association of persons joined together on the basis of equality for fulfillment of their economic and business interests.

Eligibility to forming a Co-operative Societies

A group of ten persons can form a co-operative society. In India, such societies function under the Co-Operative Societies Act, 1912 and other State Cooperative Societies Acts.

The main objectives of co-operative society are:

  • To render service rather than earning profit,
  • To provide mutual help instead of competition. and
  • To offer self help


Co-operative societies are formed with the principles of co-operation. It is formed primarily to render services to its members. It also provides some service to the society.

On the basis of objectives, various types of Co-operatives are formed. They are Consumer co-operatives, Producers co-operatives, Marketing co-operatives, Housing Co-operatives and Credit Co-operatives.


1. It is a voluntary association of persons. Individuals having common interest can join together to form a co-operative society.

2. To form a co-operative society, there has to be a minimum number of 10 members. It can have unlimited members at maximum.

3. Co-operative societies has to be compulsorily registered under the Co-operative Societies Act..

4. Co-operative society can enjoy perpetual succession.

5. It has its own common seal.

6. It can own property in its name and enter into contract with others.

7. It can sue others in court of law.

8. The aim of any co-operative society is to provide service to its members and to the society in general.

9. Each member has got the right to vote and can take part in the management of the society.

10. A co-operative society starts with a fund contributed by its members in the form of units called shares. The capital of the co-operative society is the funds provided by the members by purchasing shares. It can also raise loans and obtain grants from the government easily.

11.Members of a Co-operative society enjoy a fixed rate of dividend after deduction from the profit for the capital subscribed.


1. It is easy to form a co-operative society. Any ten persons can join together and voluntarily form an association. They can register themselves with the Registrar of Co-operative societies.

2. The liability of every member is limited to the extent of capital contributed by him.

3. Any individual can be a member of any co-operative society.

4. Co-operatives get a financial assistance from the State governments and enjoys exemptions and concessions in taxes.

5. The middleman’s profit is eliminated as the consumers control their own supplies through co-operative societies.

6. Each member has only one vote. Hence, it is managed in democratic manner.

7. It has got perpetual succession and enjoys legal entity.


1. The amount of capital generated by co-operative society is limited because of the members belonging to same locality or region or a particular section of people.

2. Co-operatives do not function efficiently due to lack of managerial abilities.

3. It does not enjoy professionalism as they cannot employ professionals at initial stages due to limited funds.

4. Co-operatives, are formed to render service to its members than to earn profit. This motive does not encourage co-operatives to function effectively.

5. Among the members, there exists lot of conflicts due to personality differences, ego etc.

6. Secrecy cannot be maintained in co-operative societies.

7. The co-operative societies mostly depend on government for financial assistance.

8. Co-operative societies are not suitable for business organizations that has objective to earn profit.


Qus:-How can we form a cooperative society?

A co-operative society needs to be established under the Co-operative Societies Act, 1912. It can also be created under the applicable state co-operative society’s regulation. A co-operative society can be created by a minimum of 10 adult members

Qus:-What is the purpose of forming a cooperative society?

A co-operative society is a voluntary association of individuals having common needs who join hands for the achievement of common economic interest. Its aim is to serve the interest of the poorer sections of society through the principle of self-help and mutual help.

Qus:-Which among the following is the key factor behind the formation of cooperative societies?

A Cooperative Society has been formed behind the following broad objectives: To render services to its members instead of making profits. It encourages a state of mutual help in the place of competition. It assumes a state of self-help in the place of dependence.

Qus:-Who takes decision in cooperative society?

For matters which requires the sanction of the registrar of cooperative societies in Delhi it shall be submitted to the Registrar of cooperative societies , through the Joint Registrar of cooperative societies, for order or decision or approval or permission, as the case may be.

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